Energy analyst Kelvin Emmanuel has expressed skepticism about the effectiveness of Nigeria’s new executive directives aimed at boosting cost efficiency in the upstream oil sector. In an interview on Arise TV, he stated that while the Cost Efficiency Incentive (CEI) may benefit offshore fields, it fails to address persistent issues in onshore operations, such as high costs and inefficiencies.
Emmanuel emphasized that true reform requires the Nigerian National Petroleum Company (NNPC) to transition into a beneficial owner, a process that could take at least two years and involves comprehensive audits and valuation before a public offering.Kelvin Emmanuel acknowledged that Nigeria’s new oil directives are a positive step but warned they won’t attract investment unless they ensure competitive returns. He noted that offshore fields may benefit from the Cost Efficiency Incentive (CEI), but onshore operations remain burdened by higher costs and inefficiencies.
Investors, he said, require a post-tax internal rate of return (IRR) above 10% to justify risks in Nigeria—something the current tax regime, with a combined rate of about 67%, makes difficult. Emmanuel also emphasized the need for accurate cost and sales data for the CEI to be effective. To boost transparency and attract investment, he recommended amending Section 65 of the Petroleum Industry Act (PIA) to allow for Incorporated Joint Venture Companies (IJVCs), enabling joint decision-making and more effective partnerships.The initiative aims to boost Nigeria’s competitiveness in attracting oil and gas investment by cutting operational costs, reducing bureaucracy, and enhancing transparency
